SACRAMENTO – A federal bankruptcy judge ruled today in the city’s favor, allowing Stockton to settle a lawsuit without having first to ask his permission.

The $55,000 settlement paid to a man named Christopher Hallon, who accused police of beating him up in 2010, amounted to a relatively small amount of money in the city’s multi-million dollar Chapter 9 case, but it has large implications.

Wall Street creditors fought the settlement on principle, fearing that the city would be free to pay off favored creditors and short others it disliked, such as the bond holders.

In his ruling, U.S. Bankruptcy Judge Christopher Klein drew the limits to his own powers over dictating how the city spends its money and makes political decisions. Klein said he will ultimately decide on the Hallon settlement and others in its plan of adjustment, or how Stockton ultimately structures its debts.

Read Thursday’s Record for more on this story by staff writer Scott Smith.